Households brace for tighter budgets amid uncertainty: Deloitte

Deloitte India flags slowdown in India’s consumption outlook for FY27 as inflation, global uncertainty and weak demand sentiment push households towards cautious spending.

India’s consumption story loses momentum, says Deloitte India, with rising prices and geopolitical risks driving an essentials-first approach and dampening discretionary demand.

The optimism that marked India’s consumption story a few months ago is beginning to lose steam as geopolitical uncertainty and inflation concerns weigh on demand. Deloitte India’s latest quarterly consumer signals study for Q4 shared exclusively with FE shows that domestic households are turning cautious as inflation, global uncertainty, and limited policy headroom converge. Also, the weak monsoon expectations in FY27 could dampen rural demand, extending the slowdown beyond urban centers, the consultancy says.

All of this has implications for consumer companies in FY27, Deloitte says, as what was expected to be a year marked by a steady demand upswing due to reforms such as GST 2.0 may not be the case. FY27 could be a challenging year, as consumer signals point to more than a cyclical dip, it says.

At the core of the shift is a growing sense of financial prudence among households. While India’s Financial Well-Being Index (FWBI) improved to levels of 111.1 in March 2026, from 109.1 recorded a year ago, the willingness to make large purchases has dipped to 65%, pointing to cautiousness on the part of consumers.

Popular expectations

Also, 73% of Indian consumers expect prices to rise across categories, causing them to monitor everyday spending closely. While many Indians continue to economise on food choices rather than forgoing quality altogether as the focus shifts to food and essentials.

Additionally, travel plans have eased in the wake of the geopolitical uncertainty, with a marginal decline seen in travel intent in March versus the previous year. And the Overall Vehicle Purchase Intent Index has slipped to 85.2 in March 2026 versus 97.1 reported last year, though demand for electric vehicles remains strong.

“Consumers are prioritising essentials and savings rather than expanding their discretionary baskets. The approach is essentials-first, with small, routine discretionary purchases rather than large spends,” Anand Ramanathan, partner & consumer industry leader, South Asia, Deloitte, said.

Potential impact

The impact of the pullback, Deloitte says, is expected to be most visible in consumption-driven sectors, particularly fast-moving consumer goods (FMCG), retail, travel and tourism, cars and durable products. Urban demand — especially in mass segments — is likely to soften, putting pressure on the volume growth seen in recent quarters, notably, Q4.

“We expect a broad-based slowdown in consumption in FY27, and companies need to factor that into their planning,” Anand said. While most companies including names such as Nestle India, Hindustan Unilever and Marico see the geopolitical uncertainty as more of a short-term issue, Deloitte says that more attention needs to be paid on the demand side as well.

“Companies are focusing on cost control and addressing supply-side pressures, but the bigger test lies in navigating weaker demand as cautious consumption could be prolonged,” he says.

This shift is prompting a rethink of strategies that drove growth in recent years, experts said. Premiumisation, a key lever for margin expansion, may lose momentum as consumers become more price-sensitive. Companies may need to revisit pricing architectures and reintroduce smaller, value-driven pack sizes to sustain volumes. At the same time, aggressive expansion into smaller towns could slow, with firms refocusing on urban markets where spending resilience remains relatively stronger.